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What type of risk is unique to a specific industry, business enterprise, or investment type?

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Terms in this set (288)

What type of risk is unique to a specific industry, business enterprise, or investment type?

Nonsystematic risk

Under which of the following circumstances is an investor in a position to acquire stock?

Buy a call, sell a call (The holder of a call has the right to buy stock at the strike price if exercised. The seller of a put is obligated to buy stock at the strike price if exercised)

Options- a premium

the cost of an option contract, expressed in dollars per share of the underlying stock

Options- strike price

The price at which the stock will be bought or sold if the contract is exercised, expressed in dollars per share

A customer believes that ABC's price will go up but does not have the money to buy 100 shares right now. How could the customer use options to profit from an increase in the stock's price?

buy calls, write puts (both are bullish)

A corporation's offer to current stockholders of the ability to purchase a proportionate number of new shares at a specific price for a limited time is called a

right (they usually expire in 30-45 days)

American depositary receipts (ADRs)

issued by banks, represent a specific number of shares of a foreign company, and trade and pay dividends in dollars

Which of the following records must be maintained for 6 years?

Customer ledgers (statements)

While underwriters can assist with preparation and filing, the accuracy and adequacy of these documents is the responsibility of the

Issuing corporation

What institutions serve as depository and clearing facilities?

Depository Trust Company and National Securities Clearing Corporation (most specifically) then carrying and clearing firms can act as these as well.

What is a transfer agent?

(often a bank) for a corporation is responsible for ensuring that its securities are issued in the correct owner's name, canceling old and issuing new certificates, maintaining records of ownership, and handling problems relating to lost, stolen, or destroyed certificates

What is the function of the clearing corporation?

Acting as an intermediary in a trade, examples of these can be a commercial bank, can be a broker-dealer but doesn't have to be

Who is considered a control person (security)

those owned by directors, officers, or persons (which include corporations, trusts, etc.) who own or control 10% or more of the issuer's equity securities (an unaffiliated person would have to own 10% or more of the outstanding shares)

What are the two components of Return on Investment?

Capital gains and income

To expand the overall economy, we want to

buy securities via open-market operations, pushing interest rates down